Private performances for the public good: Aereo and the battle for broadcast's soul.

• Author: Hsu, Max

TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND A. The Interested Parties 1. Broadcasters 2. Online Broadcast Video Providers 3. Cable Television Providers and other MVPDs B. The Public Performance Right C. Retransmission Consent D. The Issue Before the Supreme Court E. The Supreme Court Opinion III. ANALYSIS A. The Statutory Language and Legislative Intent Support a Different Interpretation B. Prohibiting Aereo Leads to "Surprising Consequences" C. Aereo's Innovation Promotes the Progress of the Arts and Sciences D. Holding Aereo Noninfringing Promises Significant Industry Benefits 1. Broadcasters a. Access to Affiliated Networks b. Alternative Network Structures c. Viewership d. Spectrum Auction 2. Multichannel Video Programming Distributors a. Integration. b. Supplemental Programming 3. Consumers E. Congress and the FCC Are Better Equipped Than the Court to Handle Such an Issue 1. Congress Could Legislate to Bring Aereo Within the Scope of the Copyright Act 2. Congress Could Reconcile the Retransmission Consent and the Compulsory License System 3. The FCC Should Consider Aereo's Effect on the MVPD Market F. The Public Performance Right Is the Wrong Theory of Liability 1. The Reproduction Right 2. Secondary Liability IV. CONCLUSION I. INTRODUCTION

In 2013, the average price for a cable television subscription was $64.41, 5 percent higher than it was in 2012 and nearly three times the average price in 1995. (1) They say that the best solution to high prices is competition, and the advent of services offering television and other media via the Internet may present an attractive alternative to conventional cable bundle subscriptions. (2)

One such service is Aereo, the brainchild of Chaitanya "Chet" Kanojia. (3) Kanojia founded Navic Networks, whose technology allows cable and broadcast providers to measure audience demographics and place advertisements accordingly in real time. (4) Finding that, at any given moment, approximately half of pay TV subscribers were watching free, over-the-air broadcast channels, Kanojia engineered Aereo as a means of separating the two, enabling consumers to view broadcast television without the added cost of an antenna or cable or satellite subscription. (5) In order to protect their current business model, which depends in large part on retransmission fees, broadcast networks brought copyright infringement claims against Aereo and similar services that allow users to stream broadcast channels via the Internet to various devices. (6)

The Copyright Act grants a copyright owner several exclusive rights, including the right to publicly perform her copyrighted work. (7) Broadcasters alleged that Aereo, in retransmitting their signals to the public without authorization, violated this exclusive right. (8) Aereo, used thousands of dime-sized antennas to retransmit broadcasters' signals on a "one-to-one" basis--assigning each user her own particular antenna and remote DVR, with which only the assigned user could record and access content. It argued that this individualized form of retransmission made its performances private, not public. (9) Federal courts across the county disagreed whether Aereo's conduct violated broadcasters' exclusive rights under the Copyright Act. (10) After previously declining to directly address the public performance right in this context, (11) the Supreme Court finally addressed the issue in June 2014, holding that Aereo publicly performed broadcasters' copyrighted works, in violation of their exclusive rights under the Copyright Act. (12)

This Note argues that the Supreme Court erred in its holding and that Aereo's retransmission was not a public performance, based on several important considerations. Congress intended that the public performance inquiry take into account the nature and medium of the performance, and the plain language of the Copyright Act reflects as much. (13) Consequently, the unique, one-to-one manner in which Aereo transmitted its performances distinguishes it from other cable and satellite operators who publicly perform copyrighted works. Furthermore, the Court should strive to interpret the law in a manner that promotes both predictability and consistency. This includes construing the law in such a way as to avoid "surprising consequences," (14) such as prohibiting intuitively innocent behavior. Aereo's technology, like the legally legitimate Sony Betamax and Cablevision RS-DVR before it, functionally mimicked currently available home-use technology. (15) Additionally, Aereo represented an innovative technology that improved accessibility for the public and streamlined the dissemination of creative content and information. The Court's holding that Aereo infringed on the public performance right runs afoul of the principal purpose of U.S. copyright law, to "promote the Progress of Science and the useful Arts," (16) and the Communication Act's principal objective, to "make available, so far as possible, to all the people of the United States, without discrimination ..., a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." (17)

Furthermore, Aereo's technology promises a significant positive impact for the entire industry, including broadcasters shifting to alternative network structures and potential implementation of Aereo-like technology by multichannel video programming distributors. Finally, even if Aereo ought to be subject to certain copyright restrictions as a matter of good policy, the Court improperly stretched the public performance right in order to reach Aereo's conduct. Rather than engaging in results-oriented judicial rulemaking, the Court should have examined Aereo's service under an alternative theory of liability or left the task to Congress to form a more elegant and comprehensive legislative solution.

2. BACKGROUND

   1. The Interested Parties

      Whether Aereo's retransmission is public or private has many potential effects on the entire broadcasting industry, implicating the interests of many different parties. Included among the various players are the broadcasters who own the content, the multichannel video programing distributors ("MVPDs") who partner with broadcasters to provide the content to consumers, and the IP broadcast video providers who seek to provide the content without broadcaster consent.

      1. Broadcasters

         On one side of the debate are broadcast television networks who, in conjunction with local broadcast affiliates, create, assemble, and distribute television programming free over-the-air to the American public. Broadcast networks and stations hold copyrights in the content they produce and distribute via over-the-air broadcast signals, and therefore are entitled to certain protections and exclusive rights under U.S. copyright law. (18) For television broadcasters, this includes the right "to perform the copyrighted work publicly." (19) Thus, any party seeking to transmit such copyrighted programming to the public must first obtain a license or otherwise receive the consent of the broadcaster. (20)

         Most broadcasters also partner with MVPDs to transmit their programming to paying cable and satellite subscribers. Under the Cable Television Protection and Competition Act of 1992 (the "Cable Act"), if an MVPD wishes to carry a broadcaster's signal, the MVPD must first obtain the station's consent. (21) MVPDs thus engage in private negotiations with broadcasters (under certain FCC guidelines), and frequently offer them monetary compensation (known as "retransmission fees") or other forms of consideration in exchange for their consent, without which MVPDs would be prohibited from transmitting said channels to their subscribers. (22)

      2. Online Broadcast Video Providers

         Opposite the broadcasters are providers such as Aereo and FilmOn X, who offer a fee service that enables subscribers to stream free, over-the-air broadcast television via the Internet. (23) Users can either watch a program almost contemporaneously with the over-the-air broadcast (24) or record a program for later viewing. (25)

         Aereo housed and managed an antenna farm comprised of thousands of antennas. (26) Each user was assigned a tiny individual antenna and remote DVR that they controlled via Internet-connected device. (27) When a user selected a program to watch or record, the server tuned the individual's antenna to the broadcast frequency of the channel showing the desired program. (28) A unique copy of the program was saved to a portion of a hard drive reserved for the particular user. (29) The user could play back only the copies that she created. (30) Throughout the entirety of this process, each antenna, data stream, and digital recording was segregated by user, and even if two users chose to view the same television program at the same time, they never shared an antenna or viewed the same data stream or digital recording containing the copyrighted content. (31) Furthermore, this process could only be initiated by the user and did not run independently of user direction. (32) Most notably, Aereo did not obtain a statutory license or pay any retransmission fees, or otherwise obtain consent from broadcasters in order to retransmit broadcasters' over-the-air signal. (33)

      3. Cable Television Providers and other MVPDs

         Under the Cable Act, an MVPD is "a person such as, but not limited to, a cable operator, a multichannel multipoint distribution service, a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming." (34) Commonly, MVPDs are television cable or satellite operators such as Comcast or DirecTV, who offer broadcast and cable television programming to subscribers. The Cable Act requires MVPDs to obtain retransmission consent from broadcasters in order to carry their broadcast signal, (35) which often results...