How Key Decisions In Copyright Cases Can Impact The Pace Of Technological Innovation

from the don't-underestimate-the-importance dept

Next month, I have a law review article coming out, specifically focused on how much innovation is held back and hindered when courts rule against new and innovative technologies based on the claim that they are infringing copyrights. This goes well beyond just the technology on trial itself, but many follow-on innovators who are held back or hindered in either designing their innovations or receiving investments for those same innovations. Markham Erickson, a telecom and internet lawyer, has written up a blog post that highlights this same point in looking at the recent ruling in the Aereo caes and how important the Cablevision case was in driving the innovation that led to Aereo, and to a variety of other investments in online services, and cloud computing in particular. First, Erickson notes that both the Cablevision and Aereo rulings helped create legal symmetry such that the length of a cable should not impact whether a technology is legal or not (i.e., a remote device is treated the same as a device in or on your home), and then he talks about the wider impact of that clarity:

In reaching this conclusion, the court placed utmost importance on certain technological designs such as the use of an individual antennae and copies unique to the individual. The court also made clear that Cablevision’s holding was not confined to particular, pre-approved technologies: “[W]e see no support in Cablevision or in this court’s subsequent decisions for the Plaintiff’s argument that Cablevision’s interpretation of the Transmit clause is confined to technologies similar to the VCR.” Aereo, 2013 WL at *11.

This rejection of a technology-specific reading of Cablevision should be heartening to cloud service providers. The reliance of cloud service providers on Cablevision is hard to overstate. After the Cablevision decision, the average quarterly investment in cloud computing in the United States increased by 41 percent. By one estimate, the certainty provided by Cablevision led to an additional incremental investment in US cloud computing firms of anywhere between $728 million and $1.3 billion in the 2 and 1/2 years following the decision. As the Second Circuit observed in Aereo, “many media and technology companies have relied onCablevision as an authoritative interpretation of the Transmit Clause. One example is cloud media services, which have proliferated in recent years.”

And yet, he notes, this clarity and ability to invest and to innovate may be at risk. As we noted at the time, the stunning dissent in the Aereo case actually indicated that designing a system to be within the clear boundaries of the law as explained in the earlier case should be seen as intent to infringe. That’s a rather incredible interpretation when you think about it. Following the explicit nature of the law should be seen as trying to subvert it? Talk about a way to chill innovation. If that became the law, the chilling effects on innovation would be tremendous. Not only would innovators be fearful of creating new services that might be sued for infringement, they wouldn’t even know how to make sure their technologies were considered legal, due to a court system that explicitly argued that any attempt to obey the law may be seen as an attempt to subvert it!

Meanwhile, other courts seem to be attacking these basic principles, which may result in more stifling of significant innovation and investment. We’ve avoided covering what’s now called either the “AereoKiller” or “BarryDriller” cases, because the service, which used to be known as FilmOn, seems much more focused on doing stupid promotional stunts, rather than something serious. His lawsuit against CBS, as well as changing the name of FilmOn to AereoKiller/BarryDriller, highlights the sort of focus that David seems to have. And, unfortunately, when you have someone more focused on publicity stunts and acting like a clown, rather than mounting a serious legal defense, you get bad rulings. AereoKiller is a somewhat similar service to Aereo, but may actually end up killing Aereo and a ton of other important innovations, not because it’s better/more innovative, but because it’s mounting a horrible defense on a similar issue, and has already lost at the district court. The impact on innovation could be huge. With a split decision and concerns about Aereo’s future success, investment in key innovations, including various cloud services, may be held back, while other countries continue to invest in such companies.

It’s incredible that we have a legal process, and a tool in today’s copyright law, that is being actively used to scare off key investment in new innovations at a time that we should be much more focused on innovation.

Filed Under:
Companies: aereo, cablevision

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Comments on “How Key Decisions In Copyright Cases Can Impact The Pace Of Technological Innovation”

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34 Comments
Chosen Reject (profile) says:

The innovations being made here are innovations in communication. Copyright is an attempt to incentivize publishing works. People will create whether copyright exists or not. People will communicate whether future innovations occur or not. But creation becomes easier when communication is easy. Publishing is easier when communication is easy. Life gets better, wrongs get righted, and people are happier (in general) when communication is easier.

If I had to choose either incentives to innovate on communication or incentives to publish creative works, I’d choose innovation in communication every single time. That’s partly because communication is important on so many other levels than creative works, but also because communication breeds creative works. So the one (communication) improves both, while the other (copyright) impedes one and may not be improving the other[1]. That means if copyright hinders innovation in communication in even the least degree, it should be abolished. And it does, so abolish it.

[1] Show me proof that copyright is necessary for creative works.

Anonymous Coward says:

As we noted at the time, the stunning dissent in the Aereo case actually indicated that designing a system to be within the clear boundaries of the law as explained in the earlier case should be seen as intent to infringe.

That’s not what the dissent in Aereo says, Mike. Judge Chin said that Aereo was different than Cablevision such that Aereo couldn’t seek safe harbor in the Cablevision decision. In no way did Judge Chin think that Aereo was “within the clear boundaries of the law.” You’re totally misreading that if you think he found it illegal yet still within the law. The fact that that makes no sense should tell you that it’s wrong. Nor do I agree that the Cablevision decision was meant to provide broad safe harbors to other technologies. The opinion specifically says that it shouldn’t be read too broadly.

RonKaminsky (profile) says:

Re: Re:

That’s not what the dissent in Aereo says, Mike. Judge Chin said that Aereo was different than Cablevision such that Aereo couldn’t seek safe harbor in the Cablevision decision.

Unfortunately true. Chin makes the probably correct point that Congress, in its lobby-blinded cluelessness, went out of its way to define “transmit” to “include all conceivable forms and combinations of wires and wireless communications media, including but by no means limited to radio and television broadcasting as we know them”.

The fact that that makes no sense should tell you that it’s wrong.

I agree with you there, probably because the things that we are thinking are wrong are totally different. You didn’t mean “copyright law”, by any chance?

Anonymous Coward says:

AereoKiller is a somewhat similar service to Aereo, but may actually end up killing Aereo and a ton of other important innovations, not because it’s better/more innovative, but because it’s mounting a horrible defense on a similar issue, and has already lost at the district court. The impact on innovation could be huge.

Yeah, the irony is that Aereokiller is probably going to kill Aereo, but not in the way that they presumably intended. That said, I don’t agree that Aereo is particularly innovative. Where’s the innovation? You keep saying it’s innovative, but you never explain how. As far as I can tell, the only “innovation” is that they retransmit broadcasts but they don’t have a license. I’m sure you think that’s a great innovation, but I don’t see it. Can you explain?

Anonymous Coward says:

Re: Re:

No they rent antennas for others the innovation is that consumers don’t have to care about maintenance of expensive equipment or bother with technicians.

The retransmission of the signal is done by individuals by their own rented equipment, so kindly throttle off and go sell your snake oil elsewhere.

I am not paying a license for OTA and nor is anybody else.

Anonymous Coward says:

Re: Re: Re:

Mike wrote about Aereo last summer: http://www.techdirt.com/blog/innovation/articles/20120830/13260820222/how-copyright-has-driven-online-streaming-innovators-insane.shtml

Therein, of Aereo he said: “incredibly inefficient and convoluted,” “ridiculous setup,” and “very bizarre, convoluted and inefficient systems that make no sense.”

And here, he’s praising it as a great, new innovation.

Which is it, Mike? Can you agree that your statements then and now seem to be contradictory? I doubt you’ll respond, but it’d be great if you would.

Anonymous Coward says:

Re: Re: Re:2 Re:

I love gray more than black or white. I live for gray. But no one’s explaining how this “very bizarre, convoluted and inefficient system” that “make[s] no sense” is also the beacon of cutting edge innovation. Those statements are rather contradictory. I’m reminded of when Mike claimed that Zediva was hardcore innovative technology because they literally plugged a DVD player into a computer. The only innovation with these services is that they don’t pay licensing fees to public perform works.

That One Guy (profile) says:

Re: Re: Re: Re:

So it looks like you picked a few quotes from the article without actually understanding the meaning behind it. That or just cherry-picked those lines out to support your argument, while ignoring the rest of it.

Either way you seem to have missed the point, which is that Aereo had to go with a system like that to stay within the (completely insane)law. What they are trying to do, offer people the ability to watch free tv shows on their computers is innovative, but it’s hampered greatly by the screwed up mess copyright has made the law into, which makes the ‘how’ the mess those quotes describe.

Anonymous Coward says:

Re: Re: Re:2 Re:

So it looks like you picked a few quotes from the article without actually understanding the meaning behind it. That or just cherry-picked those lines out to support your argument, while ignoring the rest of it.

In one post Mike talks about how dumb the technology is such that no one in their right mind would make it, and in the next it’s the greatest innovation in the world and needs to be protected. It’s not cherry-picking. It’s pointing out obvious contradictory positions from Mike.

Either way you seem to have missed the point, which is that Aereo had to go with a system like that to stay within the (completely insane)law. What they are trying to do, offer people the ability to watch free tv shows on their computers is innovative, but it’s hampered greatly by the screwed up mess copyright has made the law into, which makes the ‘how’ the mess those quotes describe.

I’ve had the ability to record over-the-air broadcasts on my computer for later playback for almost a decade. That’s not innovation. If they were paying licensing fees and doing this thing with all the tiny antennas, you guys would be mercilessly mocking it. Same with Zediva. If they had paid licensing fees and then hooked up DVD players to computers, you would think it was the dumbest thing in the world. But since they don’t pay the licensing fees, it’s a wonderful “innovation.”

Ninja (profile) says:

Re: Re: Re:3 Re:

And you keep missing the point. The point is that legal uncertainty forces companies to use stupid layouts to comply with them and that’s what Mike was criticizing. The innovation is in the fact that they actually offer streaming, the possibility of watching a movie without leaving home to rent the movie and to watch freely broadcast signals in places where those do not reach for whatever the reason.

In Zediva’s case to avoid paying absurdly stratospheric licensing fees they decided to operate exactly like a physical rental store (1 DVD per customer) while offering the comfort of not having to go get the disc. And they were shot down evne though they went to those lengths to avoid any lawsuits.

Aereo is doing something even more ridiculous to avoid lawsuits (and they came anyway because heck, it’s the goddamn MAFIAA suing for everything and anything). They could grab the signal once and replicate to their clients but instead they install a dedicated antenna just to comply with a law that would be stupid if it wasn’t fruit of sheer corruption from the MAFIAA.

But you have to be pathologically obnoxious and ignore the point intentionally, no?

Anonymous Coward says:

Re: Re: Re:4 Re:

In Zediva’s case to avoid paying absurdly stratospheric licensing fees they decided to operate exactly like a physical rental store (1 DVD per customer) while offering the comfort of not having to go get the disc. And they were shot down evne though they went to those lengths to avoid any lawsuits.

But they didn’t act “exactly the same as a physical rental store.” They publicly performed the works, whereas a rental store does not. The former needs a license, the latter does not. And the silly argument about the “length of cord” was summarily rejected by the court–as it should have been.

Aereo is doing something even more ridiculous to avoid lawsuits (and they came anyway because heck, it’s the goddamn MAFIAA suing for everything and anything). They could grab the signal once and replicate to their clients but instead they install a dedicated antenna just to comply with a law that would be stupid if it wasn’t fruit of sheer corruption from the MAFIAA.

The law says that if you publicly perform the works, you need a license. It’s not stupid. It recognizes that those who invest the time, effort, money, and skill into producing valuable works should have the exclusive rights to those works as an incentive to create the works in the first place. Those incentives are clearly working. If others want to create works and let the world stream them for free whenever and however they want, they are welcome to do so. Where’s all the streaming services like that with content that doesn’t rely on exclusive rights? Funny that. If copyright is so dumb, then where’s all the stuff that doesn’t rely on copyright?

Ninja (profile) says:

Re: Re: Re:5 Re:

They publicly performed the works

No they didn’t. They streamed to a single customer from a single player with a single disc which is very, very, very far from a public performance. You are being incredibly dishonest. The length of the cord argument was not made by Zediva as far as I know.

The law says that if you publicly perform the works, you need a license.

Indeed, that’s why they had a single antenna for every single customer. It is not a public performance no matter how much you believe it.

Those incentives are clearly working.

This comment can be disputed with studies that agree with it (albeit biased if you properly analyze their methodology) and that disagree with it (some of them pretty sound while none really perfect). It’s not clear.

If copyright is so dumb, then where’s all the stuff that doesn’t rely on copyright?

There are plenty of examples and they are cited regularly here at Techdirt. But if I want to be fundamentalist I would say that one can’t avoid copyright. Everything is copyright as soon as created regardless of if you agree with it or not. Very fair eh?

I’m not sure if you are truly ignorant and believe in the bs you are spewing or if you are just paid to spew it. Either case is sad and worrying.

Anonymous Coward says:

Re: Re: Re: Re:

“Therein, of Aereo he said: “incredibly inefficient and convoluted,” “ridiculous setup,” and “very bizarre, convoluted and inefficient systems that make no sense.”

Yet they both seem to work and frighten gatekeepers enough that they’re thowing money at the problem hoping they can bury it.
Obviously they (and you, boy) are afraid.

Ninja (profile) says:

Re: Re:

So I have a regional open broadcast signal in Seattle that I want to watch in Miami but it’s not available there. This service is providing all regional open broadcasts to be watched from a single place. Seems obvious indeed but who else allows it? After all, being from Seattle and having moved to Miami why would I want to watch stuff from Seattle area eh?

Anonymous Coward says:

Re: Re:

“As far as I can tell, the only “innovation” is that they retransmit broadcasts but they don’t have a license. I’m sure you think that’s a great innovation, but I don’t see it. Can you explain?”

As usual, boy, you misinterpret the facts to suit yourself.
Aereo doesn’t “retransmit” any more than your home’s over-the-air antenna “retransmits” to your living room set.
It simply uses a virtual “cable” to do so from your own rented antenna (not an antenna or dish providing service to hundreds or thousands of people) to any receiver you choose.

Any questions, boy?

Anonymous Coward says:

Re: Real effects of the Aereo case

“The real repercussion of the Aereo case will likely be the hastened demise of unscrambled over the air broadcasting.”

We lost “unscrambled” over the air broadcasting when the digital broadcast system was implemented several years ago.
Millions of tvs (and radios that carried tv audio) were rendered useless.
Portable tvs (like the set I used when commuting) were blanked out.
And, while there are new portables, due to the nature of the digital signal (which requires a STATIONARY receiver), I can no longer watch TV while traveling on the bus or train.

John Fenderson (profile) says:

Re: Re: Real effects of the Aereo case

We lost “unscrambled” over the air broadcasting when the digital broadcast system was implemented several years ago.

A million times this. The switch to digital broadcasting effectively eliminated OTA television for me and a very large percentage of people in my region.

It was a coup for the privatization of everything. It was a net loss for the general public.

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