Paying for cable in Boston, watching it on a laptop in L.A.: does Slingbox violate federal copyright laws?

• Author: Rivers, Dominic H.

"The Slingbox does not make a copy, or allow indiscriminate redistribution over the internet. It simply takes the TV programming that you have already bought and paid for, and "slings" it somewhere else." (1)

"I can't believe [Slingbox] hasn't been stopped already.... They can't do that; there's no way that's legal." (2)

1. INTRODUCTION

   Within only the past three years, inventors Blake and Jason Krikorian launched the company Sling Media, marketed one of the world's most critically acclaimed new gadgets, sold hundreds of thousands of these gadgets, and then flipped their company for $380 million. (3) The Krikorians made themselves rich by enabling the populace to watch more television, on more channels, in more locations, in more situations, and on more devices than with any imagined combination of previously available technologies. (4) They did so with Slingbox, a trapezoid-shaped contraption that captures a live television signal from a consumer's home and then redirects, or "slings," the signal over the internet to devices such as laptops and mobile phones, located in some other part of the world. (5) With Slingbox, the end-user can channel-surf on his laptop or mobile phone, as if viewing the television in his living room. (6) This consumer empowerment may result in a new generation of American business travelers who watch their hometown sports teams live from European hotels, college students who watch their parents' satellite channels from faraway dorm rooms, and cubicled corporate workers who surreptitiously watch soap operas on company time. (7)

   The Krikorians may remember subsequent years more ambivalently, as opposing interests and adverse case law converge to question the legality of their invention. (8) Cable and satellite television companies generally contend that Slingbox illegally usurps their exclusive rights to broadcast or rebroadcast certain programming. (9) Cable companies, in particular, decry the inequity of having invested billions of dollars in infrastructure, only to see an invention emerge that induces consumers to opt against paying for cable in their offices and second homes. (10) Further, major professional sports leagues, for whom licensing of live sporting events is a primary source of revenue, fear and loathe an invention that allows consumers to subvert geographic blackouts and eschew league-marketed streaming internet broadcasts. (11) The United States Supreme Court's unanimous 2005 decision in MGM Studios, Inc. v. Grokster, Ltd., (12) holding that companies can be contributorily and vicariously liable for their customers' illegal file sharing, may embolden media companies and sports leagues to try forcing Sling Media out of business by suing them with analogous legal theories. (13) Meanwhile, proponents of Slingbox defend it on "fair use" grounds, dismissing media companies' arguments as specious attempts to force consumers into paying for cable multiple times. (14)

   This potential legal battle is reminiscent of the "Sony-Betamax" case, which transpired from the late 1970s through the early 1980s. (15) In Sony, manufacturers of an early Video Cassette Recorder (VCR), the precursor to the modern Digital Video Recorder (DVR), narrowly survived a contributory infringement action filed by owners of television program copyrights. (16) Similarly, in the Slingbox controversy, a cutting-edge piece of technology allows for more convenient and frequent television viewing, but threatens television copyright holders' abilities to fully enjoy the benefit of their property rights, and might someday inspire such copyright holders to sue. (17) If Sling Media is sued, however, it will face additional challenges that the Sony manufacturers did not encounter, including the ambiguous Grokster precedent and retransmission claims stemming from Slingbox's ability to "broadcast." (18)

   This Note will first pinpoint the sources of federal copyright laws and introduce the Supreme Court's current tendency regarding such laws. (19) This Note will then focus on contributory and vicarious copyright cases from Sony to the present. (20) Next, this Note will introduce statutes and cases within broadcasting and retransmission law that may offer insight into the legality of Slingbox. (21) This Note will then analyze whether Slingbox violates federal copyright laws, particularly in light of the Supreme Court's guidance in Sony and Grokster. (22) Finally, this Note will discuss the adequacy of the tests established in Grokster and suggest necessary clarifications and revisions. (23)

2. HISTORY

   1. Federal Copyright Laws

      In order to promote the "useful arts," the Founding Fathers provided Congress with a constitutional option to grant authors monopoly power over their writings "for limited times." (24) The very first Congress exercised this option by passing the Copyright Act of 1790, which provided exclusive rights to authors for fourteen years with the possibility of an additional fourteen-year renewal. (25) Over time, Congress repeatedly increased the duration of an author's exclusive rights, such that copyrights now extend seventy years beyond the author's life. (26)

      Congress has also expanded the definition of "writings" and provided those constitutionally characterized as "[a]uthors" with multiple ways to exploit the proprietary interests in their creations. (27) The Copyright Act now presumes "writings" to encompass any "original works of authorship fixed in any tangible medium of expression," including sound recordings, architectural works, sculptures, choreography and pantomimes, and most germane to the Slingbox controversy, motion pictures and audiovisual works. (28) The current Act also provides the author with a bundle of rights, any part of which she may sell, transfer, lease, lend, or retain, similar to other forms of tangible and intangible property. (29) For example, a screenwriter might sell the distribution and reproduction rights to her script to a film studio, while reserving the right to prepare "derivative works," such as sequels. (30) Thus, "copyright owners" include persons or entities holding legal title to any portion of the bundle of rights. (31) Federal copyright laws provide a variety of remedies to deter and punish infringers and compensate copyright owners whose bundles of rights have been usurped. (32)

      Historically, as copyright owners have pushed for broader protection of their exclusive rights, the judiciary has struggled to assure that such protections conform to their constitutional purpose. (33) As Justice Stewart wrote in 1975:

      The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. The immediate effect of our copyright law is to secure a fair return for an "author's" creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. "The sole interest of the United States and the primary object in conferring the monopoly," this Court has said, "lie in the general benefits derived by the public from the labors of authors." When technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of this basic purpose. (34) Recently, however, the Supreme Court has displayed acute deference to Congress in defining the limit of the copyright owner's monopoly. (35) In 2003, after copyright owners successfully lobbied Congress to pass the Sonny Bono Copyright Extension Act in 1998, the Supreme Court decided Eldred v. Ashcroft, (36) and upheld the constitutionality of the Act by concluding that a monopoly of seventy years beyond the life of the author and ninety-five years for works-for-hire did not violate the Constitution's "limited times" directive. (37)

      Congress has also fashioned federal copyright laws to conform to technological advances. (38) For example, sections 111 and 119 of title 17, the portion of United States Code devoted to copyright matters, allow cable and satellite providers to rebroadcast certain programs that originally appeared on network television, without first obtaining express permission from the copyright holders. (39) Under these provisions, cable and satellite providers must still pay for copyrighted content but can acquire licenses according to statutory procedure, rather than by soliciting and acquiring permission from each individual copyright owner. (40) In 1998, with the enactment of the Digital Millennium Copyright Act (DMCA), Congress further amended title 17 by forbidding the manufacture and distribution of devices whose only significant commercial use is to circumvent copyright protection technologies. (41)

      Today, many copyright infringement actions involve vicarious or contributory infringement, in addition to the more intuitive, statutorily-defined direct infringement. (42) Similar to tort-based vicarious liability, a master in an employment relationship will face civil liability for copyrights that his servant infringes within the course and scope of employment. (43) Unlike tort-based vicarious liability, however, there is no independent contractor exemption in copyright law. (44) Thus, copyright laws hold proprietors civilly liable for the direct infringement by their independent contractors, as well as their employees. (45) The oft-cited illustration of this concept is that a dance hall will be liable for the infringement of its independently contracted band if the band plays unauthorized copyrighted material and the dance hall fails to make reasonable efforts to prevent the infringement. (46) Courts have imposed this burden on proprietors for at least two policy reasons: to prevent proprietors from claiming ignorance...