Aereo, the public performance right, and the future of broadcasting.

Author:Delaney, Kevin W.
Position:III. Did Aereo Perform the Broadcasters' Works? D. The Supreme Court Determines Whether Aereo Performed through VI. Conclusion, with footnotes, p. 54-92
  1. The Supreme Court Determines Whether Aereo Performed

    1. The Majority Opinion: Arguing Aereo Performs Because it Resembles a Cable System

      To determine whether Aereo performed, the majority had to establish which party, Aereo or its subscribers, transmitted the broadcasters' works. (196) A conclusion that Aereo transmitted the works--through the creation, operation, and maintenance of its system--would mean Aereo performed. Conversely, a conclusion that Aereo's subscribers transmitted the works--through their selection of which programs to watch--would mean the subscribers performed.

      In arguing that it did not perform, Aereo referenced numerous lower court opinions supporting "the sound principle that direct liability is inappropriate where a defendant programs equipment to respond 'automatically' to a user command that results in alleged infringement." (197) Because it did no more than supply equipment that users commanded, Aereo contended that it did not perform for the reason that it did not transmit the broadcasters' works. (198)

      The majority disagreed. In an opinion that failed to directly reference the volitional-conduct requirement, the majority concluded that Aereo performed because it resembled the CATV systems at issue in Fortnightly and Teleprompter--the ones that, according to the Copyright Act's legislative history, Congress intended to bring within the scope of copyright law. (199) As the majority put it: "[T]he language of the [Copyright] Act does not clearly indicate when an entity 'perform[s]' ... and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo's performs." (200) The fact that "Aereo may ... emulate equipment a viewer could use at home" had little impact on the majority because, as it wrote, the same could have been said of the services offered by the CATV systems in Fortnightly and Teleprompter. (201)

      To support its decision, the majority referenced a definition of cable systems included in the Copyright Act's legislative history. According to the legislative history, "cable systems are commercial enterprises whose basic retransmission operations are based on the carriage of copyrighted program material and that copyright royalties should be paid by cable operators to the creators of such programs." (202) To the majority, Aereo fell within this definition because it "sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast." (203)

      Interestingly, however, the majority did not apply the definition for cable systems included within the text of the Copyright Act, which states:

      A "cable system" is a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service..., (204) The majority's decision not to reference the Copyright Act's definition may surprise some, as Justice Sotomayor expressed the opinion during oral arguments that Aereo's service fell within the definition's scope. (205) Perhaps the majority's reluctance to apply the definition can be attributed to the basic tenants of administrative law. When reviewing a federal agency's construction of a statute, courts are usually required to afford the agency's interpretation with deference. Typically, courts will apply Chevron deference, a two-step test for determining when an agency's interpretation of a statute should be upheld. Under the test, a court will uphold an agency's construction of a statute if (1) "the statute is silent or ambiguous with respect to the specific issue" and (2) the agency's interpretation of the ambiguous issue is based on a permissible or reasonable construction of the statute. (206)

      Prior to the decision in Aereo III, the Copyright Office, a federal agency, had decided not to classify Internet retransmission services as cable systems under the Copyright Act. (207) Had the majority deemed Aereo a cable system under the Copyright Act, it would have overruled the Copyright Office's construction of the statute. Such a ruling, however, could have been made only after affording the Copyright Office with Chevron deference and deeming the Copyright Office's construction of the statute unreasonable--an action the majority would have likely been unwilling to take. (208)

    2. The Dissenting Opinion: Arguing the Majority's Rationale was Flawed and Offering Support for the Volitional-Conduct Requirement

      In a dissenting opinion joined by Justices Thomas and Alito, Justice Scalia wrote the majority's opinion suffered from a number of deficiencies. (209) For one, Justice Scalia scolded the majority for its extensive reliance on legislative history. He wrote:

      Perceiving the text to be ambiguous ... the Court reaches out to decide the case based on a few isolated snippets of legislative history.... The Court treats those snippets as authoritative evidence of congressional intent even though they come from a single report issued by a committee whose members make up a small fraction of one of the two Houses of Congress. (210) Justice Scalia's critique should hardly be surprising; he has long asserted that legislative history fails to serve as a valid indicator of Congressional intent. (211) By applying a test that determines whether one performs by asking whether he, she, or it "looks like" a CATV system, Justice Scalia said, the majority ran the risk of adopting "a two-tier version of the Copyright Act, one part of which applies to 'cable companies and their equivalents' while the other governs everyone else." (212)

      Additionally, Justice Scalia wrote that the majority failed to apply its "looks like cable TV" standard correctly. According to Justice Scalia, "material differences" existed between Aereo and the CATV systems in Fortnightly and Teleprompter, differences that should have precluded a finding that Aereo resembled those systems. (213) Perhaps the biggest difference, Justice Scalia wrote, was that the CATV systems in Fortnightly and Teleprompter "captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmitted] only specific programs selected by the user, at specific times selected by the user." (214)

      As a final critique, Justice Scalia predicted that future courts would have great difficulty determining whether an entity performs because of its resemblance to cable systems. (215) The majority, after all, provided little guidance in regard to how such assessments should be made. (216) Specifically, Justice Scalia questioned whether an entity that solely transmitted previously recorded programs could resemble a cable system. (217) In his opinion, such entities could not because "cable companies did not offer remote recording and playback services when Congress amended the Copyright Act in 1976." (218)

      To Justice Scalia, the determination of whether Aereo performed should have been made through the application of the volitional-conduct requirement. Although Justice Scalia acknowledged the Supreme Court has never expressly endorsed the requirement, he described it as being "grounded in the [Copyright] Act's text, which defines 'perform' in active, affirmative terms...," (219) In other words, because the Copyright Act defines to "perform" an audiovisual work as "'showing] its images in any sequence' or 'mak[ing] the sounds accompanying it audible,"' the text implies that direct infringers must make some sort of affirmative, volitional act. (220) Thus, in adopting the view that "[a] defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act," Justice Scalia described the question presented by Aereo's service as "who does the performing." (221)

      The question presented by Justice Scalia in Aereo III is the public performance right equivalent of the question presented by the Second Circuit in Cablevision. There, as noted, the Second Circuit sought to identify the direct infringer by determining "who made ... [the] copy"? (222) Although Justice Scalia and the Second Circuit asked similar questions, their answers differed dramatically. To the Second Circuit, the person that pushes the record button supplies the necessary level of volitional conduct. (223) If Justice Scalia had followed the Second Circuit's logic, the answer to his question should have been the person who uses Aereo's system to push the Watch button. Justice Scalia, however, chose to take a different path. Justice Scalia wrote that, in the majority of instances, the person or entity that engages in the volitional conduct necessary for direct liability will be the one that selects and arranges the copyright content. (224)

      Justice Scalia provided two examples to explain his reasoning. First, he discussed a "copy shop [that] rents out photo-copiers on a per-use basis." (225) Under Justice Scalia's reasoning, the shop would not be directly liable for copyright infringement if a patron used one of the shop's machines to "duplicate a famous artist's copyrighted photographs...," (226) Why? Because the copy shop did not select the copyrighted content. (227) As a second example, he discussed video-on-demand services like Netflix. Similar to Cablcvision's RS-DVR, video-on-demand services are automated systems that operate pursuant to user commands. However, under Justice Scalia's rationale, video-on-demand services can be held directly liable due to their selection of content. In other words, Netflix's act of selecting and arranging content for their subscribers to watch...

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